Average-Cost Optimality of a Base-Stock Policy for a Multi-Product Inventory Model with Limited Storage

2002 ◽  
pp. 241-260 ◽  
Author(s):  
Dirk Beyer ◽  
Suresh P. Sethi ◽  
Ramaswamy Sridhar
Keyword(s):  
Average Cost ◽  
Inventory Model ◽  
Base Stock ◽  
Base Stock Policy ◽  
Stock Policy ◽  
Product Inventory ◽  
Cost Optimality

scholarly journals Two-Echelon Inventory Model With Service Consideration and Lateral Transshipment

2021 ◽  
Vol 20 ◽  
pp. 108-123
Author(s):  
Samuel Chiabom Zelibe ◽  
Unanaowo Nyong Bassey
Keyword(s):  
Steady State ◽  
Poisson Process ◽  
Inventory Model ◽  
Base Stock ◽  
Computational Experiments ◽  
Stock Level ◽  
Continuous Review ◽  
Base Stock Policy ◽  
Lateral Transshipment ◽  
Stock Policy

This paper considers a two-echelon inventory system with service consideration and lateral transshipment. So far, researchers have not extensively considered the use of lateral transshipment for such systems. Demand arrivals at both echelons follow the Poisson process. We introduce a continuous review base stock policy for the system in steady state, which determined the expected level for on-hand inventory, expected lateral transshipment level and expected backorder level. We showed that the model satisfied convexity with respect to base stock level. Computational experiments showed that the model with lateral transshipment performed better that the model without lateral transshipment.

Optimal in-store inventory policy for omnichannel retailers in franchising networks

2019 ◽  
Vol 47 (12) ◽  
pp. 1251-1265 ◽  
Author(s):  
Jianjun Xu ◽  
Lanlan Cao
Keyword(s):  
Inventory Management ◽  
Inventory Model ◽  
Base Stock ◽  
Periodic Review ◽  
Inventory Policy ◽  
Stock Level ◽  
Content Type ◽  
Allocation Policy ◽  
Base Stock Policy ◽  
Stock Policy

Purpose The purpose of this paper is to characterize the optimal ordering and allocation policy for a store replenishment decision in the context of an omnichannel retailer in a franchise network. The authors further show that a myopic policy is optimal, which circumvents the curse of dimensionality for the multi-period inventory model and help store managers optimize their decisions about the amount of inventory to stock for both online and offline demands and the percentage of inventory to reserve for online orders. Design/methodology/approach This research is trigged by several managerial studies which suggest reserving a certain percentage of the in-store inventory for online orders as a good store inventory allocation practice for omnichannel retailers in a franchise network. The authors used an analytical model to develop this practice by clarifying how store managers can decide on the amount of inventory to replenish and the percentage to reserve for online orders. Findings This study develops a finite horizon, periodic review inventory model to identify an optimal and dynamic replenishment and allocation policy. The analysis uncovers the system’s fundamental structural property concavity. The research shows that, due to this property, the optimal replenishment policy is a base-stock policy. The latter is due to the base stock level being independent of the initial inventory at hand, and the optimal allocation level being non-decreasing on the base-stock level. Research limitations/implications This study contributes to the literature on store inventory management for omnichannel retailers in a franchise network by investigating their optimal store inventory ordering and allocation policy. Nevertheless, the zero-lead time and zero-setup cost assumptions limit the findings. Practical implications Insights into an optimal store inventory policy may guide franchisee store managers to decide on the amount of inventory to replenish and the percentage to reserve for online orders. Originality/value The originality of this paper lies in its focus on in-store inventory management for omnichannel retailers in a franchise network. The findings are helpful for franchisor retailers to implement the omnichannel strategy at the level of in-store inventory management. Beyond using incentive systems, the franchisor should leverage legitimate powers by mentioning a relevant measure in their contracts with their franchisee to minimize their channel conflicts and ensure their customers have seamless shopping experiences.

Optimality of Base Stock Policy under Unknown Demand Distributions: New Results and a New Method

2021 ◽  
Author(s):  
Alain Bensoussan ◽  
Suresh Sethi ◽  
Abdoulaye Thiam ◽  
Janos Turi
Keyword(s):  
Base Stock ◽  
New Method ◽  
Base Stock Policy ◽  
Stock Policy

scholarly journals Base stock policy with retrial demands

2013 ◽  
Vol 37 (6) ◽  
pp. 4464-4473 ◽  
Author(s):  
N. Anbazhagan ◽  
Jinting Wang ◽  
D. Gomathi
Keyword(s):  
Base Stock ◽  
Base Stock Policy ◽  
Stock Policy

Service Level Relationships in Multi-stage Systems under the Base Stock Policy

OPSEARCH ◽  
2002 ◽  
Vol 39 (3-4) ◽  
pp. 230-242
Author(s):  
Subrata Mitra ◽  
Ashis K. Chatterjee
Keyword(s):  
Service Level ◽  
Base Stock ◽  
Base Stock Policy ◽  
Multi Stage ◽  
Stock Policy

Understanding the Performance of Capped Base-Stock Policies in Lost-Sales Inventory Models

2020 ◽  
Author(s):  
Linwei Xin
Keyword(s):  
Base Stock ◽  
Superior Performance ◽  
Lead Times ◽  
Lost Sales ◽  
Index Policy ◽  
Stock Level ◽  
New Family ◽  
Base Stock Policy ◽  
Stock Policy ◽  
Base Stock Policies

Single-sourcing lost-sales inventory systems with lead times are notoriously difficult to optimize. In this paper, we propose a new family of capped base-stock policies and provide a new perspective on constructing a practical hybrid policy combining two well-known heuristics: base-stock and constant-order policies. Each capped base-stock policy is associated with two parameters: a base-stock level and an order cap. We prove that for any fixed order cap, the capped base-stock policy converges exponentially fast in the base-stock level to a constant-order policy, providing a theoretical foundation for a phenomenon by which a capped dual-index policy converges numerically to a tailored base-surge policy recently observed in other work in a different but related dual-sourcing inventory model. As a consequence, there exists a sequence of capped base-stock policies that are asymptotically optimal as the lead time grows. We also numerically demonstrate its superior performance in general (including small lead times) by comparing it with otherwell-known heuristics.

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